Northgate plc Preliminary results Year ended 30 April 2013 June - - PowerPoint PPT Presentation

Northgate plc

Preliminary results Year ended 30 April 2013 June 2013

Northgate plc

Continued growth

Interim results for the six months ended 31 October 2014

Agenda

2

Chris Muir

• Financial review
• Operational review

– UK – Spain

Outlook Bob Contreras Bob Contreras

Northgate plc

Preliminary results Year ended 30 April 2013 June 2013

Chris Muir: Group Finance Director

Financial Review

Group financial summary

Operating profit Profit before tax EPS Interim dividend Net debt ROCE

£397m 11.4%

Apr-14 – £346m Apr-14 – 9.9%

4.3p

FY14 – 3.2p

4 Operating profit for H1 FY15 was £54.1m, compared to £38.1m for H1 FY14. Profit before tax for H1 FY15 was £47.8m, compared to £32.0m for H1 FY14. EPS for H1 FY15 was 28.6p compared to 18.3p for H1 FY14.

Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

Depreciation rate change impact

The depreciation rate changes effective from 1 May 2012 and 1 May 2014 have had the following impact in the six months to October 2014 (total £6.6m): UK £m Spain £m Corporate £m Group £m

Operating profit 38.7 17.4 (2.0) 54.1 Impact of depreciation change (4.9) (1.7) – (6.6) Adjusted operating profit 33.8 15.7 (2.0) 47.5 FY14 H1 operating profit 27.2 12.8 (1.9) 38.1 Adjusted increase 25% 23% – 25% Adjusted ROCE 11.8% 10.1% – 10.6% ROCE at 30 April 2014 11.2% 9.2% – 9.9%

UK operating profit

“Operating profit increased as a result of an increase in average vehicles on hire, the change in depreciation rate and disposing of more vehicles at an enhanced PPU.”

6 0.8 8.9 0.8 3.9 (2.8) (0.1) FY14 Revenue Depreciation Other direct costs Vehicle disposals Payroll Overheads FY15 £m

£27.2m £38.7m

Impact of new sites

The impact of the eleven new sites opened since February 2013 was an

• perating profit of £0.7m. The operating profit and ROCE impacts are as follows:

H1 FY15 H1 FY14

Reported operating profit 38.7 27.2 New sites adjustment (0.7) 1.3 Adjusted operating profit 38.0 28.5

H1 FY15 (%) H1 FY14 (%)

Reported ROCE 12.7 12.5 New sites adjustment 0.8 0.5 Adjusted ROCE 13.5 13.0

Spain operating profit

8

“The growth in operating profit is predominantly as a result of higher average vehicles on hire and an increased volume of disposals at enhanced PPU.”

5.7 (1.3) 0.9 3.3 (1.8) 0.1 FY14 Revenue Depreciation Other direct costs Vehicle disposals Payroll Overheads FY15 €m

€21.9m €15.0m

Cash flow and net debt

£m Opening net debt (1 May-14) 346.1 Net cash used in operations 40.3 Dividend 9.0 Shares purchased for share

• ption schemes

10.6 Debt issue costs 2.0 Non-cash movements (0.2) Exchange movements (10.8) Closing net debt (31 Oct-14) 397.0 Facilities headroom 139.6 Net debt Gearing

9

As expected, net debt increased by £51m from 30 April 2014 to £397m at 31 October 2014. Gearing increased from 91% at 30 April 2014 to 100% at 31 October 2014.

Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

0.00 0.50 1.00 1.50 2.00 Apr-14 Oct-14

Financial covenants

10

Interest cover Leverage Loan to value

• EBIT headroom £49m
• Threshold 3.0x
• EBITDA headroom

£45m

• Threshold 2.0x
• Loan headroom £163m
• Threshold 70%

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 Apr-14 Oct-14

5.6x 6.9x 1.5x 1.6x

0% 10% 20% 30% 40% 50% 60% 70% Apr-14 Oct-14

46% 50%

Northgate plc

Preliminary results Year ended 30 April 2013 June 2013

Bob Contreras: Chief Executive

Operational review

UK operational highlights

Vehicles on hire Utilisation Customer numbers NPS

89% +5%

(FY14 – 88%)

Vehicle sales ROCE Network

8,600

at improved values

12.7%

(Apr-14 – 11.2%)

Focus remains on driving growth in the UK

12

• pened in the HY

4 new sites +1,800

since April 2014 compared to FY14

+10%

Vehicle sales evolution

Oct 2014 Apr 2009 Difference Retail % 29 18 11 Defleet centres 7 7 Van Monster sites 11 7 4 PPU has risen to £1,636 in the half year to October 14. The target for retail penetration remains at 30%+.

2 4 6 8 10 12 500 1,000 1,500 2,000 2,500 3,000 3,500 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14

• No. sites open

VOH

VOH

• No. sites open

Network expansion: progress to date

14

Sandyford

Slough: opened Jul-13

Southall Watford Enfield

Closing VOH of 3,100, a 55% increase from 30 April 2014

Network expansion: opportunities

15

• Site openings in the London

area now largely complete (with Dartford in November 2014).

• Attention has now moved to the

regions including the North West and West Midlands.

• Opportunities for 17 further sites

across the UK.

• Potential sites will have to meet

minimum 16% ROCE threshold target.

Spain operational highlights

Vehicles on hire Maintenance costs

since April 2014

Utilisation

+1,300

• 3%

92%

despite fleet size +10%

(FY14 – 92%)

Vehicle sales Customer numbers NPS ROCE

4,100

at improved values

+12% 10.6%

(Apr-14 – 9.2%)

Change in focus to driving growth in Spain

16

since April 2014

19.5

at 31 October

Vehicle sales evolution

Oct 2014 Apr 2009 Difference Retail % 17 4 13 Van Monster sites 8 1 7 PPU has risen to €1,517 in the half year to October 14. The medium term ambition is for the Spanish business to match the retail sales percentage achieved in the UK.

Bob Contreras: Chief Executive

Outlook

Outlook

UK Spain Dividend Outlook Continue to build on commercial improvement and branch expansion

19

Focus has switched to driving organic growth Targeting progressive dividends within the dividend cover range 3.75x – 2.50x Both businesses are now looking at growth

• ver the medium term

Questions

20

Financial summary

21

Appendix 1 £m Oct 2014 Oct 2013 UK Spain Total Total Operating profit (excluding vehicle disposals) 24.6 12.5 37.1 27.4 Vehicle disposals 14.1 4.9 19.0 12.6 Total operating profit 38.7 17.4 56.1 40.0 Corporate (2.0) (1.9) Group operating profit 54.1 38.1 Cash interest (6.1) (6.1) Non-cash interest (0.2) – Profit before tax 47.8 32.0

Exceptional items

£m Oct 2014 Oct 2013 Restructuring costs – UK – 0.6 Restructuring costs – Spain – 0.2 Pension settlement – 2.3 Total exceptional items – 3.1

22

Appendix 2

Capital employed (October 14)

£m UK Spain Group Vehicles (hire and used) 467 223 690 Property 28 30 58 Other fixed assets 16 3 19 Trade and other debtors 62 35 97 Trade and other creditors (51) (9) (60) Capital employed 522 282 804 Net debt (253) (143) (396) Net assets 269 139 408 ROCE 12.7% 10.6% 11.4% Capital employed (April 2014) 464 273 737

23

Appendix 3

Facilities and borrowing cost

£m Oct 2014 Syndicated bank facilities 523 Other facilities 15 538 rate* Fixed rate borrowings 270 2.7% Floating rate borrowings 129 2.3% Net debt (excluding arrangement fees) 399 2.6% Headroom 140

24

Appendix 4

* Weighted average borrowing rate inclusive of swaps

Operating cash flows

£m Oct 2014 Oct 2013 Operating profit (statutory) 53.0 33.5 Depreciation and amortisation 73.8 82.7 Working capital and other movements (9.9) (9.4) Cash generated from operations 116.9 106.8 Net interest paid (6.1) (4.9) Corporation tax (paid)/received (8.4) 4.4 Cash flow after interest and tax 102.4 106.3 Vehicle purchases (206.1) (158.1) Vehicle disposals 64.1 58.6 Other net capex (0.7) (2.9) Cash flow before equity and financing costs (40.3) 3.9 Equity and financing costs, dividends and other items 53.9 (10.1) Net cash flow 13.6 (6.2)

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Appendix 5

Group fleet capital expenditure

£m FY15 (H1) FY14 (H1) FY14 (H2) Purchases UK 143.2 109.9 91.3 Spain 62.8 48.6 51.2 Disposals UK (57.7) (48.6) (42.1) Spain (17.3) (18.2) (20.3) Net fleet capex 131.0 91.7 80.1 Vehicles: Purchases UK 11,700 9,400 7,600 Spain 7,100 5,100 5,600 18,800 14,500 13,200 Disposals UK 8,600 7,600 6,400 Spain 4,100 3,700 4,600 12,700 11,300 11,000

26

Purchases and disposals stated on an accruals basis and exclude direct selling costs.

Appendix 6

UK KPIs

FY15:H1 FY14:H1 FY14:H2 Fleet size (closing) 57,000 52,800 53,900 Utilisation (average) 89% 88% 88% Closing vehicles on hire 49,400 45,900 47,600 Revenue per vehicle (annualised) £6,174 £6,238 £6,030 Operating margin 25.2% 18.7% 16.2% Headcount (closing) 1,971 1,862 1,968 PPU £1,636 £1,330 £1,544 ROCE 12.7% 12.5% 11.2%

27

Appendix 7

Spain KPIs

FY15:H1 FY14:H1 FY14:H2 Fleet size (closing) 40,000 36,500 37,800 Utilisation (average) 92% 93% 92% Closing vehicles on hire 36,000 33,300 34,700 Revenue per vehicle (annualised) €5,281 €5,438 €5,360 Operating margin 22.9% 16.6% 17.5% Headcount (closing) 890 858 865 PPU €1,517 €766 €865 ROCE 10.6% 8.6% 9.2%

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Appendix 8

New branch 1 - assumptions

No.

• Yr. 0
• Yr. 1
• Yr. 2
• Yr. 3
• Yr. 4
• Yr. 5

Average on rent

• 122

334 472 534 534 Closing on rent

• 240

410 540 540 540 Average fleet

• 145

375 530 600 600 Closing fleet

• 290

460 600 600 600 Disposals

• 145

230 Revenue £ Revenue pv on rent 6,163 Costs £ Non fleet site CAPEX 125k Depreciation pv 2,011 Maintenance / repair costs pv 674 Other direct costs pv 398 Costs £’000

• Yr. 0

£’000 Yr.1 £’000 Yr.2 Staff costs 51 305 414 Rent & rates 13 75 77 Marketing

• 65

10 Other overheads 33 90 92 Total 97 535 593

• On rent at maturity 540
• 84% utilisation year 1 then 89%
• 14 employees

Appendix 9

New branch 2 – annual impact

• Yr. 0
• Yr. 1
• Yr. 2
• Yr. 3
• Yr. 4
• Yr. 5

Revenue

• 751

2,077 2,966 3,391 3,425 Depreciation

• (292)

(769) (1,109) (1,280) (1,306) Maintenance / repair

• (98)

(258) (371) (429) (437) Other direct costs

• (58)

(152) (219) (253) (258) Staff costs (51) (305) (414) (422) (431) (439) Overheads (46) (230) (178) (182) (184) (189) Disposal profit

• 87

138 Operating profit (97) (232) 306 663 901 934 ROCE

• (13%)

7% 12% 16% 17% Appendix 10